6 Important Financial Decisions Should Be Made In 30s

           It is a common saying to justify spending by saying “life is short”, although; we can wait for our expensive wishes to be fulfilled. The truth is life is not short at all, it is long. The average life expectancy of men is" 76.2 years "and 81 years for women (Anderson 1). Majority of individuals who are thirty-year old, talking about life is short do not realize that they should be looking another fifty longs years.

Here are six important financial decisions 30-year–olds make that could come back in their early retirement age.

The importance of employer’s or company’s plans offered to employees: There are many important elements to consider when selecting a job, but retirement benefits offered are vital to wealth-building, in the long period of life. A thirty year old employee does not realize the importance of working for a company which should or should not offer retirement plan or 401(k) plans. Consider this first example, in a company if a 30-yeard old is making $75,000, and is setting aside 10% of his or her pay in a 401(k) plan. Then, at the age of 55, he or she gets back 8% average return, would have a balance of close to $600,000.  Now compare it with another company which not only offer the same 401(k) plan but also matches the 10% of the employee’s contribution would get almost $1 million in their retirement account, which is also the double of the first example’s amount, at the age of 55.

Borrowed from www.brigthub.com

 

   The importance to negotiate the starting salary: According to a study conducted by George Mason Universities and Temple University, a slight higher starting salary can have drastic financial outcomes over the period of time. For example, If an employee negotiates $5000 increase compare to those who did not negotiate, the result by researchers was astonishing. Over forty years of career, an employee who starts his career with a salary of $55,000 instead of $50,000 would earn $600,000 more in his income. Just with 5% increase each year makes a big difference in employee’s financial  life.

 

Deciding the right partner of life: Marrying is one of the most important financial decisions of one’s life. Marrying for love and then staying together is better than getting divorced after a while. Getting divorce is equally stressful, financially and emotionally for men and women. The divorce itself can be expensive and dividing financial possessions, damage almost everyone’s financial planning.

 

Planning for children: According to the "National Health Statistic Report", Americans are delaying in having children. Having children, at an average age of 25 is beneficial in a way (Anderson). This is because when parents get to the age of 50, their children are already independent and parents still have 15 years to save for their retirement plans.

 borrowed from www.moneymanagement.org

 

Plan in renting or buying a house is important: If someone is planning is relocating his or her area, need mobility or not interested in being a long distance property-owner, then it is favorable to rent off. However, buying a house is beneficial for pre-retirees. A home owner with a fixed-rate mortgage will not worry about a rent increase. As a home owner, over a long period of time the mortgage will be paid off and the expense left behind is only the annual property taxes and fixes to the house. Having a fixed-rate mortgage is far better than a rented house, as with inflation rents can increase and can affects the financial planning. As a homeowner come close to retirement, he or she does not have to worry about the rents.

 

 Importance of every dollar: According to Nancy Anderson, the financial planner at Learn Vest Planning Services regrets that from last twenty years, she should not have spent most of her money in coffee and clothes. Especially cloths and books bought from sales and were hardly ever used. Every dollar saved has a big value, especially when it is add up all together.

                It can be a useful tip to use debit card and by the end of the month pull out spending list through online account. Highlight every transaction spent on items which were wanted then needed in life. Add all the spending and then, an individual can realize how much money was wasted which could be saved for retirement funds.

             The six elements of financial decision mentioned above, are important for individuals who are getting to the age of 30s so that they can plan better retirement plans, they can value every dollar spend, they can decide better what company to choose for their careers, they can discuss in an interview to have a higher start of salary, they can pick the right life partner and pick the right time to have children. It is everyone’s duty to have cautious financial assessments for their longstanding life.
  
             

 

 

Work Cited

 

Anderson, Nancy. "7 Financial Decisions Made In Your 30s That May Hunt You In Your 50s." Forbes               RETIREMENT. 26 Sept 2013: 1. Web. 2 Oct. 2013.

"401 (k) Plan." INVESTOPEDIA Dictionary. N.p.. Web. 2 Oct 2013.

"Retirement." Dictionary.com. William Collins Sons & Co. Ltd., n.d. Web. 2 Oct 2013.